The attack on economics sprang rather from a dislike of the application of scientific methods to the investigation of social problems. The existence of a body of reasoning which prevented people from following their first impulsive reactions, and which compelled them to balance indirect effects, which could be seen only by exercising the intellect, against intense feeling caused by the direct observation of concrete suffering, then as now, occasioned intense resentment.

"The Trend of Economic Thinking", lecture delivered at LSE on March 1, 1933, published in Economica (May 1933)

There is all the difference in the world between treating peopleequally and attempting to make them equal.

Many of the greatest things man has achieved are not the result of consciously directed thought, and still less the product of a deliberately coordinated effort of many individuals, but of a process in which the individual plays a part which he can never fully understand.

Scientism and The Study of Society (1944), p. 67; later published in The Counter-revolution of Science

It would clearly not be an improvement to build all houses exactly alike in order to create a perfect market for houses, and the same is true of most other fields where differences between the individual products prevent competition from ever being perfect.

"The Meaning of Competition" (1946), p. 99

We can either have a freeParliament or a free people. Personal freedom requires that all authority is restrained by long-run principles which the opinion of the people approves.

"'Free' Enterprise and Competitive Order" (1947); later published in Individualism and Economic Order (1948), p. 113-114

Socialism has never and nowhere been at first a working-class movement. It is by no means an obvious remedy for the obvious evil which the interests of that class will necessarily demand. It is a construction of theorists, deriving from certain tendencies of abstract thought with which for a long time only the intellectuals were familiar; and it required long efforts by the intellectuals before the working classes could be persuaded to adopt it as their program.

Conservatism, though a necessary element in any stable society, is not a social program; in its paternalistic, nationalistic and power adoring tendencies it is often closer to socialism than true liberalism; and with its traditionalistic, anti-intellectual, and often mystical propensities it will never, except in short periods of disillusionment, appeal to the young and all those others who believe that some changes are desirable if this world is to become a better place.

p. xi.

The more the state "plans" the more difficult planning becomes for the individual.

"Individualism: True and False" (1945); later published in Individualism and Economic Order (1948)

There is all the difference in the world between treating people equally and attempting to make them equal. While the first is the condition of a free society, the second means as De Tocqueville describes it, 'a new form of servitude.'

We must face the fact that the preservation of individualfreedom is incompatible with a full satisfaction of our views of distributive justice.

The part of our social order which can or ought to be made a conscious product of human reason is only a small part of all the forces of society.

The Counter-Revolution of Science : Studies on the Abuse of Reason (1952)Edit

It is only insofar as some sort of order arises as a result of individual action but without being designed by any individual that a problem is raised which demands a theoreticalexplanation.

At first everyone will seek for himself what seems to him the best path. But the fact that such a path has been used once is likely to make it easier to traverse and therefore more likely to be used again; and thus gradually more and more clearly defined tracks arise and come to be used to the exclusion of other possible ways.

It may indeed prove to be far the most difficult and not the least important task for human reason rationally to comprehend its own limitations.

It is essential for the growth of reason that as individuals we should bow to forces and obey principles which we cannot hope fully to understand, yet on which the advance and even the preservation of civilization depend.

While the method of the natural sciences is … analytic, the method of the social sciences is better described as compositive or synthetic. It is the so-called wholes, the groups of elements which are structurally connected, which we learn to single out from the totality of observed phenomena … Insofar as we analyze individual thought in the social sciences the purpose is not to explain that thought, but merely to distinguish the possible types of elements with which we shall have to reckon in the construction of different patterns of social relationships. It is a mistake … to believe that their aim is to explain conscious action. … The problems which they try to answer arise only insofar as the conscious action of many men produce undesigned results … If social phenomena showed no order except insofar as they were consciously designed, there would indeed be no room for theoretical sciences of society and there would be, as is often argued, only problems of psychology. It is only insofar as some sort of order arises as a result of individual action but without being designed by any individual that a problem is raised which demands a theoretical explanation … people dominated by the scientistic prejudice are often inclined to deny the existence of any such order … it can be shown briefly and without any technical apparatus how the independent actions of individuals will produce an order which is no part of their intentions … The way in which footpaths are formed in a wild broken country is such an instance. At first everyone will seek for himself what seems to him the best path. But the fact that such a path has been used once is likely to make it easier to traverse and therefore more likely to be used again; and thus gradually more and more clearly defined tracks arise and come to be used to the exclusion of other possible ways. Human movements through the region come to conform to a definite pattern which, although the result of deliberate decision of many people, has yet not be consciously designed by anyone.

"The Individualist and Compositive Method"

Even more significant of the inherent weakness of the collectivist theories is the extraordinary paradox that from the assertion that society is in some sense more than merely the aggregate of all individuals their adherents regularly pass by a sort of intellectual somersault to the thesis that in order that the coherence of this larger entity be safeguarded it must be subjected to conscious control, that is, to the control of what in the last resort must be an individual mind. It thus comes about that in practice it is regularly the theoretical collectivist who extols individual reason and demands that all forces of society be made subject to the direction of a single mastermind, while it is the individualist who recognizes the limitations of the powers of individual reason and consequently advocates freedom as a means for the fullest development of the powers of the interindividual process.

"Purpositive" Social Formations

It may indeed prove to be far the most difficult and not the least important task for human reason rationally to comprehend its own limitations. It is essential for the growth of reason that as individuals we should bow to forces and obey principles which we cannot hope fully to understand, yet on which the advance and even the preservation of civilization depend. Historically this has been achieved by the influence of the various religious creeds and by traditions and superstitions which made men submit to those forces by an appeal to his emotions rather than to his reason. The most dangerous stage in the growth of civilization may well be that in which man has come to regard all these beliefs as superstitions and refuses to accept or to submit to anything which he does not rationally understand. The rationalist whose reason is not sufficient to teach him those limitations of the powers of conscious reason, and who despises all the institutions and customs which have not been consciously designed, would thus become the destroyer of the civilization built upon them. This may well prove a hurdle which man will repeatedly reach, only to be thrown back into barbarism … Common acceptance of formal rules is indeed the only alternative to direction by a single will man has yet discovered.

"'Conscious Direction and the Growth of Reason"

The discussions of every age are filled with the issues on which its leading schools of thought differ. But the general intellectual atmosphere of the time is always determined by the views on which the opposing schools agree. They become the unspoken presuppositions of all thought, and common and unquestioningly accepted foundations on which all discussion proceeds.

I have been arguing that constitutions in the old Whig tradition ought to grow and not be made; and to suggest any completely new constitutional system is somewhat absurd.

New nations and the problem of power, The Listener, (November 10, 1960)

If you look at the Acts of Parliament, you will find that 90 per cent are not laws but are administrative orders decided by a democratic body...and called for that reason a law.

New nations and the problem of power, The Listener, (November 10, 1960)

In a nation where there is not yet a tradition of compromise...almost any attempt to put upon the government a great many tasks is bound to lead to dictatorial regimes.

New nations and the problem of power, The Listener, (November 10, 1960)

It would be a body charged with creating that framework of traditional and moral rules which any Western democracy with a long history possesses as a result of its history. Such a background is lacking in these new states and is needed...to make government function.

New nations and the problem of power, The Listener, (November 10, 1960)

[Apartheid law in South Africa] appears to be a clear and even extreme instance of that discrimination between different individuals which seems to me to be incompatible with the reign of liberty. The essence of what I said [in The Constitution of Liberty] was really the fact that the laws under which government can use coercion are equal for all responsible adult members of that society. Any kind of discrimination — be it on grounds of religion, political opinion, race, or whatever it is — seems to be incompatible with the idea of freedom under the law. Experience has shown that separate never is equal and cannot be equal.

"Conversation with Systematic Liberalism," Forum (September 1961).

We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a programme which seems neither a mere defence of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical and which does not confine itself to what appears today as politically possible…Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in power of ideas which was the mark of liberalism at its best, the battle is not lost.

Studies in Philosophy, Politics and Economics (1967).

If the human intellect is allowed to impose a preconceived pattern on society, if our powers of reasoning are allowed to lay claim to a monopoly of creative effort… then we must not be surprised if society, as such, ceases to function as a creative force.

The picture of man as a being who, thanks to his reason, can rise above the values of his civilization, in order to judge it from the outside or from a higher point of view, is an illusion. It simply must be understood that reason itself is part of civilization. … Sudden complete reconstruction of the whole is not possible at any stage of the process, because we must always use the material that is available, and which itself is the integrated product of a process of evolution.

“The Errors of Constructivism” (1970), reprinted in New Studies in Philosophy, Politics, Economics and the History of Ideas (1978)

Since the value of freedom rests on the opportunities it provides for unforeseen and unpredictable actions, we will rarely know what we lose through a particular restriction of freedom.

“Principles or Expediency?” Toward Liberty: Essays in Honor of Ludwig von Mises on the Occasion of his 90th Birthday (29 September 1971)

I am certain that nothing has done so much to destroy the juridical safeguards of individual freedom as the striving after this mirage of social justice.

Economic Freedom and Representative Government (1973)

I've always doubted that the socialists had a leg to stand on intellectually. They have improved their argument somehow, but once you begin to understand that prices are an instrument of communication and guidance which embody more information than we directly have, the whole idea that you can bring about the same order based on the division of labor by simple direction falls to the ground. Similarly, the idea [that] you can arrange for distributions of incomes which correspond to some conception of merit or need. If you need prices, including the prices of labor, to direct people to go where they are needed, you cannot have another distribution except the one from the market principle. I think that intellectually there is just nothing left of socialism.

The misconception that costs determined prices prevented economists for a long time from recognizing that it was prices which operated as the indispensable signals telling producers what costs it was worth expending on the production of the various commodities and services, and not the other way around. It was the costs which they had expended which determined the prices of things produced.
It was this crucial insight which finally broke through and established itself about a hundred years ago through the so-called marginal revolution in economics.
The chief insight gained by modern economists is that the market is essentially an ordering mechanism, growing up without anybody wholly understanding it, that enables us to utilize widely dispersed information about the significance of circumstances of which we are mostly ignorant. However, the various planners (and not only the planners in the socialist camp) and dirigists have still not yet grasped this.

“Coping with Ignorance,” Imprimis 7 (1978)

The belief derived from physics that measurement is an essential foundation of all sciences is very old. There was more than 300 years ago a German philosopher named Erhard Weigel who strove to construct a universal science which he proposed to call Pantometria, based as the name says on measuring everything. Much of economics, and if I may add in parenthesis much of contemporary psychology, has indeed become Pantometria in a sense in the principle that if you don't know what measurements mean, measure anyhow because that is what science does. The social sciences building at the University of Chicago indeed still bears since it was built 40 years ago on its outside an inscription taken from the famous physicist Lord Kelvin: "When you cannot measure, your knowledge is meager and unsatisfactory." I will admit that that may be true, but it is certainly not scientific to insist on measurement where you don't know what your measurements mean. There are cases where measurements are not relevant. What has done much damage to microeconomics is striving for a pseudo-exactness by imitating methods of the physical sciences which have to deal with what are fundamentally much more simple phenomena. And the assumption that it is possible to ascertain all the relevant particular facts still completely dominates the alternative methods of dealing with our constitutional ignorance, which economists have tried to overcome. This of course, is what has come to be called macroeconomics as distinct from microeconomics.

“Coping with Ignorance,” Imprimis 7 (1978)

It seems to me more and more that the immense efforts which during the great popularity of macroeconomics over the last thirty or forty years have been devoted to it, were largely misspent, and that if we want to be useful in the future we shall have to be content to improve and spread the admittedly limited insights which microeconomics conveys.
I believe it is only microeconomics which enables us to understand the crucial functions of the market process: that it enables us to make effective use of information about thousands of facts of which nobody can have full knowledge.

“Coping with Ignorance,” Imprimis 7 (1978)

I have arrived at the conviction that the neglect by economists to discuss seriously what is really the crucial problem of our time is due to a certain timidity about soiling their hands by going from purely scientific questions into value questions. This is a belief deliberately maintained by the other side because if they admitted that the issue is not a scientific question, they would have to admit that their science is antiquated and that, in academic circles, it occupies the position of astrology and not one that has any justification for serious consideration in scientific discussion. It seems to me that socialists today can preserve their position in academic economics merely by the pretense that the differences are entirely moral questions about which science cannot decide.

Conversation at the American Enterprise Institute for Public Policy Research, Washington, D.C. (9 February 1978); published in A Conversation with Friedrich A. Von Hayek: Science and Socialism (1979)

Nobody who has lived through the rise of the violent anti-Semitism which led to Hitler can refuse Mrs. Thatcher admiration for her courageous and outspoken warning. When I grew up in Vienna the established Jewish families were a generally respected group and all decent people would frown upon the occasional anti-Jewish outbursts of a few popular politicians. It was the sudden influx of large numbers of Galician and Polish Jews [during World War I] … which in a short period changed the attitude. They were too visibly different to be readily absorbed.

Letter to The Times after Thatcher claimed that British people were afraid of being "swamped" by people of a different culture. (11 February 1978)

I have certainly never contended that generally authoritarian governments are more likely to secure individual liberty than democratic ones, but rather the contrary. This does not mean, however, that in some historical circumstances personal liberty may not have been better protected under an authoritarian than democratic government. (...) More recently I have not been able to find a single person even in much maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Allende. Nor have I heard any sensible person claim that in the principalities of Monaco or Lichtenstein, which I am told are not precisely democratic, personal liberty is smaller than anywhere else!

Letter to Times of London (1978)

To discover the meaning of what is called "social justice" has been one of my chief preoccupations for more than 10 years. I have failed in this endeavour — or rather, have reached the conclusion that, with reference to society of free men, the phrase has no meaning whatever.

New Studies in Philosophy Politics, Economics and the History of Ideas (1978).

Is it really likely that a National Planning Officer would have a better judgement of 'the number of cars, the number of generators, and the quantities of frozen foods we are likely to require in, say, five years,' than Ford or General Motors etc., and, even more important, would it even be desirable that various companies in an industry all act on the same guess?

New Studies in Philosophy Politics, Economics and the History of Ideas (1978).

A limited democracy might indeed be the best protector of individual liberty and be better than any other form of limited government, but an unlimited democracy is probably worse than any other form of unlimited government, because its government loses the power even to do what it thinks right if any group on which its majority depends thinks otherwise. If Mrs. Thatcher said that free choice is to be exercised more in the market place than in the ballot box, she has merely uttered the truism that the first is indispensable for individual freedom, while the second is not: free choice can at least exist under a dictatorship that can limit itself but not under the government of an unlimited democracy which cannot.

My whole concept of economics is based on the idea that we have to explain how prices operate as signals, telling people what they ought to do in particular circumstances. The approach to this problem has been blocked by a cost or labor theory of value, which assumes that prices are determined by the technical conditions of production only. The important question is to explain how the interaction of a great number of people, each possessing only limited knowledge, will bring about an order that could only be achieved by deliberate direction taken by somebody who has the combined knowledge of all these individuals. However, central planning cannot take direct account of particular circumstances of time and place. Additionally, every individual has important bits of information which cannot possibly be conveyed to a central authority in statistical form. In a system in which the knowledge of relevant data is dispersed among millions of agents, prices can act to coordinate the separate actions of different individuals.
Given this context, it is intellectually not satisfactory to attempt to establish causal relations between aggregates or averages in the manner in which the discipline of macroeconomics has attempted to do. Individuals do not make decisions on the basis of partial knowledge of magnitudes such as the total amount of production, or the total quantity of money. Aggregative theorizing leads nowhere.

Conversation in 1979, published in Diego Pizano, Conversations with Great Economists (2009)

I think the basic misconception is to speak of the so-called “best” allocation of resources. What is the best? In common economics it is defined as what would be if we knew everything. Economists operate with the fictitious assumption that all the relevant data is known, but this is totally unrealistic. Nobody knows all the data. What we have is widely dispersed knowledge, which cannot be concentrated in one mind. To call the situation—which would use all the knowledge available—“optimal” is nonsense because it is by definition a non-achievable solution. Our problem is not the full utilization of all knowledge but the best use we can achieve with any known institutional structure. In that sense, some oligopolistic (and even monopolistic situations), represent the best possible utilization of knowledge that we can achieve. Even the action of a monopolist can be extremely beneficial.

Conversation in 1979, published in Diego Pizano, Conversations with Great Economists (2009)

There is no doubt, and in this I agree with Milton Friedman, that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation! So, once again, a badly programmed monetary policy prolonged the depression! So, once again, a badly programmed monetary policy prolonged the depression. One consequence of this policy was, of course, the fact that confidence was destroyed.

Conversation in 1979, published in Diego Pizano, Conversations with Great Economists (2009)

I visited Chile some time ago and I found that the country is being governed by members of Friedman's seminar! ... The economic system is working marvelously and the recovery is extraordinary. I did not see the system of political control in enough detail to have a serious opinion about it, but I can say that the economy is much freer in comparison to what it had been for a very long time. I also think that the way in which Chile is covered by the international press is scandalous.

Conversation in 1979, published in Diego Pizano, Conversations with Great Economists (2009)

I must confess that if I had been consulted whether to establish a Nobel Prize in economics, I should have decidedly advised against it.

I feared that such a prize, as I believe is true of the activities of some of the great scientific foundations, would tend to accentuate the swings of scientific fashion. This apprehension the selection committee has brilliantly refuted by awarding the prize to one whose views are as unfashionable as mine are.

The Nobel Prize confers on an individual an authority which in economics no man ought to possess.
This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence.
But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.
There is no reason why a man who has made a distinctive contribution to economic science should be omnicompetent on all problems of society — as the press tends to treat him till in the end he may himself be persuaded to believe.

I confess that I prefer true but imperfect knowledge, even if it leaves much indetermined and unpredictable, to a pretence of exact knowledge that is likely to be false.

To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.

Cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants …

On the other hand, the economists are at this moment called upon to say how to extricate the free world from the serious threat of accelerating inflation which, it must be admitted, has been brought about by policies which the majority of economists recommended and even urged governments to pursue. We have indeed at the moment little cause for pride: as a profession we have made a mess of things.

It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences — an attempt which in our field may lead to outright error. It is an approach which has come to be described as the "scientistic" attitude — an attitude which, as I defined it some thirty years ago, "is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed."

Unlike the position that exists in the physical sciences, in economics and other disciplines that deal with essentially complex phenomena, the aspects of the events to be accounted for about which we can get quantitative data are necessarily limited and may not include the important ones. While in the physical sciences it is generally assumed, probably with good reason, that any important factor which determines the observed events will itself be directly observable and measurable, in the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process, for reasons which I shall explain later, will hardly ever be fully known or measurable.

While in the physical sciences the investigator will be able to measure what, on the basis of a prima facietheory, he thinks important, in the social sciences often that is treated as important which happens to be accessible to measurement. This is sometimes carried to the point where it is demanded that our theories must be formulated in such terms that they refer only to measurable magnitudes.

There may thus well exist better "scientific" evidence for a false theory, which will be accepted because it is more "scientific", than for a valid explanation, which is rejected because there is no sufficient quantitative evidence for it.

The social sciences, like much of biology but unlike most fields of the physical sciences, have to deal with structures of essential complexity, i.e. with structures whose characteristic properties can be exhibited only by models made up of relatively large numbers of variables. Competition, for instance, is a process which will produce certain results only if it proceeds among a fairly large number of acting persons.

There may be few instances in which the superstition that only measurable magnitudes can be important has done positive harm in the economic field: but the present inflation and employment problems are a very serious one.

I confess that I prefer true but imperfect knowledge, even if it leaves much indetermined and unpredictable, to a pretence of exact knowledge that is likely to be false. The credit which the apparent conformity with recognized scientific standards can gain for seemingly simple but false theories may, as the present instance shows, have grave consequences.

To entrust to science — or to deliberate control according to scientific principles — more than scientific method can achieve may have deplorable effects. The progress of the natural sciences in modern times has of course so much exceeded all expectations that any suggestion that there may be some limits to it is bound to arouse suspicion. Especially all those will resist such an insight who have hoped that our increasing power of prediction and control, generally regarded as the characteristic result of scientific advance, applied to the processes of society, would soon enable us to mould society entirely to our liking.

Allow me to define more specifically the inherent limitations of our numerical knowledge which are so often overlooked. I want to do this to avoid giving the impression that I generally reject the mathematical method in economics. I regard it in fact as the great advantage of the mathematical technique that it allows us to describe, by means of algebraic equations, the general character of a pattern even where we are ignorant of the numerical values which will determine its particular manifestation. We could scarcely have achieved that comprehensive picture of the mutual interdependencies of the different events in a market without this algebraic technique. It has led to the illusion, however, that we can use this technique for the determination and prediction of the numerical values of those magnitudes; and this has led to a vain search for quantitative or numerical constants.

The confidence in the unlimited power of science is only too often based on a false belief that the scientific method consists in the application of a ready-made technique, or in imitating the form rather than the substance of scientific procedure, as if one needed only to follow some cooking recipes to solve all social problems. It sometimes almost seems as if the techniques of science were more easily learnt than the thinking that shows us what the problems are and how to approach them.

The conflict between what in its present mood the public expects science to achieve in satisfaction of popular hopes and what is really in its power is a serious matter because, even if the true scientists should all recognize the limitations of what they can do in the field of human affairs, so long as the public expects more there will always be some who will pretend, and perhaps honestly believe, that they can do more to meet popular demands than is really in their power. It is often difficult enough for the expert, and certainly in many instances impossible for the layman, to distinguish between legitimate and illegitimate claims advanced in the name of science.

If I am not mistaken, psychology, psychiatry and some branches of sociology, not to speak about the so-called philosophy of history, are even more affected by what I have called the scientistic prejudice, and by specious claims of what science can achieve.

The chief point we must remember is that the great and rapid advance of the physical sciences took place in fields where it proved that explanation and prediction could be based on laws which accounted for the observed phenomena as functions of comparatively few variables — either particular facts or relative frequencies of events.

As we advance we find more and more frequently that we can in fact ascertain only some but not all the particular circumstances which determine the outcome of a given process; and in consequence we are able to predict only some but not all the properties of the result we have to expect. Often all that we shall be able to predict will be some abstract characteristic of the pattern that will appear — relations between kinds of elements about which individually we know very little. Yet, as I am anxious to repeat, we will still achieve predictions which can be falsified and which therefore are of empirical significance.
Of course, compared with the precise predictions we have learnt to expect in the physical sciences, this sort of mere pattern predictions is a second best with which one does not like to have to be content. Yet the danger of which I want to warn is precisely the belief that in order to have a claim to be accepted as scientific it is necessary to achieve more. This way lies charlatanism and worse. To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.

In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the over-confident because their experiments may after all produce some new insights. But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims.

We are only beginning to understand on how subtle a communication system the functioning of an advanced industrial society is based — a communications system which we call the market and which turns out to be a more efficient mechanism for digesting dispersed information than any that man has deliberately designed.

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants.

The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society — a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.

It is possible for a dictator to govern in a liberal way. And it is also possible for a democracy to govern with a total lack of liberalism. Personally I prefer a liberal dictator to democratic government lacking liberalism.

There is no salvation for Britain unless the special privileges granted to the trade unions in 1906 are revoked. the average level of real wages of British workers would undoubtedly be higher, and their chances of finding employment better, if the wages of different occupations were again determined by the market and all limitations on the work an individual is allowed to do were removed.

I did say in print, in February, 1929 that there was no hope for economic recovery in Europe before American interest rates came down. That wouldn’t be until the American boom collapsed — which was likely to happen within the next few months.And this did, in fact, happen in October 1929.
What made me expect this, of course, was one of my main theoretical beliefs — that an inflationary boom cannot be maintained indefinitely. I was sure that a very unstable situation was created by the artificial prolongation of the boom in 1927, when the Federal Reserve tried to stave off a collapse by credit expansion.

I don’t believe we’re in for a crash now. It's much more likely that government will just conceal the continuation of inflation by price controls. But if anything is worse than an open inflation, it’s a repressed inflation. What you’re likely to get is not a violent deflation but increasing stagnation of productivity.

If the world as a whole returned to the gold standard there would be such fluctuations in the value of gold that it would very soon prove impractical. ... If a big country like the United States did return to the gold standard, it would start a great deflation.

Well, I would say that, as long-term institutions, I am totally against dictatorships. But a dictatorship may be a necessary system for a transitional period. At times it is necessary for a country to have, for a time, some form or other of dictatorial power. As you will understand, it is possible for a dictator to govern in a liberal way. And it is also possible for a democracy to govern with a total lack of liberalism. Personally I prefer a liberal dictator to democratic government lacking liberalism. My personal impression — and this is valid for South America — is that in Chile, for example, we will witness a transition from a dictatorial government to a liberal government. And during this transition it may be necessary to maintain certain dictatorial powers, not as something permanent, but as a temporary arrangement.

Interview in El Mercurio (1981)

I cannot help but protest in the strongest possible terms against the cartoon on page 3 of your publication of the 30th of December equating the present governments of Poland and Chile. It can only be explained by complete ignorance of the facts or by the systematically promoted socialist calumnies of the present situation in Chile, which I had not expected the F.A.Z. to fall for. I believe that all the participants in the Mont Pelerin Society conference held a few weeks ago in Chile would agree with me that you owe the Chilean government a humble apology for such twisting of the facts. Any Pole lucky enough to escape to Chile could consider himself fortunate.

Letter to the editor of Frankfurter Allgemeine Zeitung, on a cartoon comparing Pinochet’s Chile to Jaruzelski’s Poland, which was published on 6 January 1982

A reconsideration of the discussion in which I took an active part more than 40 years ago has left me with a rather depressing view of the somewhat shameful state of what has become an established part of economic science, the subject of ‘economic systems’. It appears to me that in this subject political attractiveness has been preserved by the flimsiest of arguments. The kindest thing one can say is that some well-meaning people have allowed themselves to be deceived by the vague and thoughtless language commonly used by specialists in the theory of these issues.

"Two Pages of Fiction", Economic Affairs (1982)

On the scale on which [tax cutting] is being tried, I’m a little apprehensive. I’m all for reduction of government expenditures but to anticipate it by reducing the rate of taxation before you have reduced expenditure is a very risky thing to do.

in "Business People; A Nobel Winner Assesses Reagan", The New York Times (1 December 1982)

I don't know what monetarism is. If monetarism just means a good old-fashioned quantity theory, of course it has not failed. If it means the particular version of Milton Friedman, I think it has because he imagines that he can achieve — ascertain — a clear quantity relationship between a measurable quantity of money and the price level. I don't think that is possible. In fact, just about 40 years ago in the opening sentences of my book, Prices and Production, I wrote that it would be a great misfortune if people ever cease to believe in the quantity theory of money. It would be even worse ever to believe it literally. And that's exactly what Milton Friedman does.

"Interview with F. A. Hayek", in Cato Policy Report (February 1983)

I don't like criticizing Milton Friedman not only because he is an old friend but because, outside of monetary theory, we are in complete agreement. Our general views on what is desired and what is not are almost identical until we get on to money. But if I told him what I said before, that I very much doubt whether monetary policy has ever done anything good, he would disagree. He personally is convinced that a good monetary policy is a foundation for everything.

And since any inflation, however modest at first, can help employment only so long as it accelerates, adopted as a means of reducing unemployment, it will do so for any length of time only while it accelerates.

And since any inflation, however modest at first, can help employment only so long as it accelerates, adopted as a means of reducing unemployment, it will do so for any length of time only while it accelerates. "Mild" steady inflation cannot help—it can lead only to outright inflation. That inflation at a constant rate soon ceases to have any stimulating effect, and in the end merely leaves us with a backlog of delayed adaptations, is the conclusive argument against the "mild" inflation represented as beneficial even in standard economics textbooks.

I mean, it became particularly acute because Keynes, against his intentions, had stimulated the development of macroeconomics. And I was convinced that not only his particular conclusions, but the whole foundation of macroeconomics was wrong.
So I wanted to demonstrate that we had to return to microeconomics, that this whole prejudice supported by the natural scientists that could deduce anything from measurable magnitudes, the effects of aggregates and averages, came to fascinate me much more. I felt in a way, that the thing which I am now prepared to do, I don’t know as there’s anybody else who can do this particular task. And I rather hoped that what I had done in capital theory would be continued by others. This was a new opening which was much more fascinating. The other would have meant working for a result which I already knew, but had to prove it. Which was very dull.
The other thing was an open problem: How does economics really look like when you recognize it as the prototype of a new kind of science of complex phenomena which could not employ the simple model of mechanics or physics, but had to deal with what then I described as mere pattern predictions, certain limited prediction. That was so much more fascinating as an intellectual problem.

In a 1985 interview with Gary North and Mark Skousen, in Hayek on Hayek (1994)

Whereas, in fact, specialised students, even after generations of effort, find it exceedingly difficult to explain such matters, and cannot agree on what are the causes or what will be the effects of particular events. The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account.

… questions about the influence of socialism are increasingly more difficult to answer as the word socialism has so many meanings. The idea that the inequalities of incomes can be greatly reduced has come to be recognized as largely impractical. Practically all endeavours at just distribution express more or less arbitrary conceptions of what is just and the central idea of Marxian socialism of a rationalisation of the means of production has been largely abandoned as technically impracticable. I believe that in general the idea of justice is more closely met by a freely competitive market than by any deliberate allocation of income to some imagined ideal of the kind.

I, like … others, owe him a great debt … his powerful mind … his lucid and always principled exposition have helped to broaden and deepen my understanding of the meaning and the requisites of a free society. ~ Milton Friedman

The most important player on Ronald Reagan's economic team is Ronald Reagan. The person most responsible for creating the economic program that came to be known as Reaganomics is Reagan himself. For over twenty years he observed the American economy, read and studied the writings of some of the best economists in the world, including the giants of the free market economy — Ludwig von Mises, Friedrich Hayek and Milton Friedman — and he spoke and wrote on the economy, going through the rigorous mental discipline of explaining his thoughts to others. Over the years he made all the key decisions on the economic strategies he finally embraced. He always felt comfortable with his knowledge of the field and he was in command all the way.

Yet whatever the need for such individual consolations, there was a general rationale for the cosmos of the market. It was the evolutionary product of historical competition between rival economic practices, which had proved its worth in the superior overall growth of production and population it had assured. Here Hayek's doctrine took a concluding utilitarian turn. The yardstick of a desirable order was not philosophical truth but practical well-being. In its own terms, this was a perfectly coherent conclusion. But his theory still faced an awkward difficulty in the apparent institutional outcome of the spontaneous social mechanisms it celebrated. For was not the steady erosion of the division between taxis and cosmos, with the seemingly inexorable growth of the welfare state, itself pre-eminently an evolutionary process? To roll it back required — according to Hayek's new prescriptions — drastic redesigning of the structure of the state. Indeed, what he now proposed was nothing less than a dismantling of every known legislature into two novel bodies with different competences and disparate electorates, to correspond to the two ontological kinds of order — the more powerful chamber, guardian of the rule of law as such, striking anyone under the age of forty-five off the voting-roll. This, as even sympathizers could not fail to notice, was a violent attack of the very constructivism his theory had set out to purge. Hayek was unmoved, Such was the price of preserving nomos, or the law of liberty, from the logic of popular sovereignty.

[Estonian Prime Minister] Mart Laar came to my office the other day to recount his country's remarkable transformation. He described a nation of people wh are harder-working, more virtuous — yes, more virtuous, because the market punishes immorality — and more hopeful about the future than they've ever been in their history. I asked Mr. Laar where his government got the idea for these reforms. Do you know what he replied? He said, "We read Milton Friedman and F. A. Hayek".

Dick Armey, in his address at the dedication of the Hayek Auditorium", Cato Institution, Washington, D.C., (9 May 1995)

People sometimes say that they don’t know what they think until they’ve said it, you know. But mind you, even as a graduate student, I’ve never thought that utility theory implies consciousness. Of course you discover things and learn about your own preferences. This is a point that I haven’t explored and that I probably should study more. It seems especially important from the point of view of innovation. By the way, what has always bothered me about Hayek is that all this local knowledge has to be transmitted before the process of social interaction can generate any new knowledge, but he doesn’t show us how that is going to happen.

Right after we published our first findings, we started getting letters from all over the country saying, "You know, all you guys have done is rediscover Austrian economics" … I admit I wasn't familiar with Hayek and von Mises as the time. But now that I've read them, I can see that this is essentially true.

Hayek was not doctrinaire about the importance of political freedom. In a 1979 interview with The Times, he defended the Chilean regime of Augusto Pinochet, which combined political repression with free-market economics, calling the results “absolutely fantastic.” Asked whether this view was inconsistent with his philosophy, Hayek replied, “You can have economic freedom without political freedom, but you cannot have political freedom without economic freedom.”

F. A. Hayek, probably the most prominent advocate of capitalism in the present period would not quite agree with Smith's notions of what is natural, but his defense of capitalism is indirect by reference to its linkage with liberty, and he explicitly rejected the idea that a legitimating concept of justice is relevant to the operations of a market system.

It may not be amiss to seen in my calculations of comparative productivity [between entrepreneurial economics and communist economies] verification of a prescient forecast [made by Hayek in 1935 in his essay "The Present State of the Debate".].

There were many Hayeks: Hayek, the political scientist; Hayek, the economist; Hayek, the philosopher of social science; Hayek, the psychologist. Even in these different roles, he played many parts.

Mark Blaug, "Hayek revisited", Critical Review 7.1 (1993)

All of his political writings are in fact amazingly repetitious, exploring a small number of big themes which, however, are not further refined or extended in new contexts.

Mark Blaug, "Hayek revisited", Critical Review 7.1 (1993)

My basic criticism of F. A. Hayek’s profound interpretation of modern history and his diagnoses for improvement is directed at his apparent belief or faith that social evolution will, in fact, insure the survival of efficient institutional forms. Hayek is so distrustful of man’s explicit attempts at reforming institutions that he accepts uncritically the evolutionary alternative. We may share much of Hayek’s skepticism about social and institutional reform, however, without elevating the evolutionary process to an ideal role. Reform may, indeed, be difficult, but this is no argument that its alternative is ideal.

I did not call him "Fritz." To me he remained always "Professor Hayek," despite his own graciousness in treating me as a peer. I shall not attempt to evaluate Professor Hayek's monumental contribution to our understanding of the events of this turbulent century, to the influence of his ideas on these events themselves or even to the development of economic theory in a strictly scientific sense.

In some of their implicit modeling of political behavior aimed at furthering special group or class interests, the Marxists seemed to be closet associates of public choice, even as they rejected methodological individualism. But how was the basic Marxist critique of politics, as observed, to be transformed into the idealized politics of the benevolent and omniscient superstate? This question was simply left glaringly unanswered. And the debates of the 1930s were considered by confused economists of the time to have been won by the socialists rather than by their opponents, Ludwig von Mises and Friedrich Hayek. Both sides, to an extent, neglected the relevance of incentives in motivating human action, including political action.

I did fully learn from Hayek the distinction between what I later called moral community and moral order and moral anarchy – this is about the sense that our genetic predisposition is all for the insider tribe.

In the end, Hayek’s free society depends upon a set of wise rulers, whether they be judges, village elders, or (temporary) military dictators, who can stand in the way of an untutored democratic mass seduced by redistributive envy.

He linked the notion of a spontaneous order that forms when agents follow (often simple) rules with the idea of complex systems in the 1950s. This was a critical breakthrough, for it allowed him to drop the old natural science-social science dichotomy ...

Critics argue that Hayek mixed a number of ethical and political philosophies in constructing his system, positions that do not necessarily cohere one with another and all of which have been independently criticized. … There are evident tensions as well between his earlier advocacy of planning a framework of law and his later enthusiasm for the gradual evolution of judge-made common law. Finally, Hayek's opinion that judges operating under the common law tradition are bound to draw "conclusions that follow from the existing body of rules and the particular facts of the case" has struck more than one observer as naive.
If one is judging his work against the standard of whether he provided a finished political philosophy, Hayek clearly did not succeed. ... While the reaction of political theorists has been principally critical, I think that economists may find Hayek‘s political writings useful in a number of ways. First, he provided the general insight that, if a market system is to work, it must he embedded in a set of other social institutions. … Furthermore, his are not new insights; most of the general ideas were familiar to the Scottish philosophers whom Hayek praised so often. But, such caveats aside, these ideas certainly were not the common currency of economists in the middle of the twentieth century.

Chile did in fact make a transition back to democracy. We doubt that Hayek had anything to do with this, and to be sure, Pinochet did not go willingly into the dark night. But in the end, democracy was restored.

Bruce Caldwell and Leonidas Montes, "Friedrich Hayek and his Visits to Chile", The Review of Austrian Economics (2014)

I've long since lost all patience with Hayek. His original, true ideas could have been five good blog posts, his errors and bizarre obsessions are numerous, and his writing style insults every person who ever tried to write a decent sentence.

The Neoclassical school has been the dominant school of economics for the last two generations, so I have also been schooled in it throughout my career. It can provide us with some very useful tools to analyse problems within a given structure, but it is not very good at understanding how the institutions, technologies, politics, and ideas that define that structure evolve over time.
In this respect, Hayek is very different from the Neoclassical school, even though many Neoclassical economists mention him in the same breath as Milton Friedman, on the basis that he was one of the most influential advocates of the free market. Unlike Neoclassical economists, however, Hayek does not take the socio-political order underlying the market relationship as given and emphasizes the ultimately political nature of our economic life. This is a big contrast to the Neoclassical view, which thinks that economics and politics can be, and should be, separated. Indeed, if you read Hayek’s book, Individualism and Economic Order, you will see that he is very critical –sometimes even abusive – of Neoclassical economics.

In fact, a large part of what we think of as economic activity is designed to accomplish what high transaction costs would otherwise prevent or to reduce transaction costs so that individuals can negotiate freely and we can take advantage of that diffused knowledge of which Friedrich Hayek has told us.

I will be discussing what happened in economics in England, but these were times when, to a very considerable extent, this was what happened in economics. The first episode I will discuss is local, but the economists involved were among the best in the world. In February 1931, Friedrich Hayek gave a series of public lectures entitled 'Prices and Production' at the London School of Economics … They were undoubtably the most successful set of public lectures given at LSE during my time there, even surpassing the brilliant lectures Jacob Viner gave on international trade theory. The audience, notwithstanding the difficulties of understanding Hayek, was enthralled. What was said seemed to us of great importance and made us see things of which we had previously been unaware. After hearing these lectures, we knew why there was a depression. Most students of economics at LSE and many members of the staff became Hayekians or, at any rate, incorporated elements of Hayek's approach in their own thinking. With the arrogance of youth, I myself expounded the Hayekian analysis to the faculty and students at Columbia University in the fall of 1931.

For all his brilliance, Hayek didn’t — at the critical time — have a good enough understanding of the dangers of deflation. He didn’t fully realize the extent of sticky wages and prices and, more deeply, he didn’t see that ongoing deflation would render the “calculation problem” of a market economy more difficult. Hayek stressed that a market calculates value in a way that a central planner cannot — but lying behind this ability to calculate is some basic macroeconomic stability. At the key moments, Hayek did not offer the proper recipe for that stability.

Tyler Cowen, "The Eternal Struggle", National Review (2011)

I think that there is an important difference between Friedman and Hayek. Hayek is an economic (classical) liberal but a social conservative: a believer in respect for throne and altar. Social conservative Hayek can see Pinochet as a good thing: far better to have an authoritarian state that maintains the conservative moral order, if it can be persuaded to adopt laissez-faire economics, than it is to have a democracy that regulates the economy. Friedman, by contrast, hates and fears a government that prohibits use of recreational drugs in your home almost as much as he hates and fears a government that won't let you undersell your politically-powerful competitors. For Friedman, Pinochet is a bad--an aggressive, powerful military dictator--whose evil the Chicago Boys can curb by persuading him to adopt laissez-faire policies.

Hayek says that the problem with classical liberalism was that it was not pure enough. The government needed to restrict itself to establishing the rule of law and to using antitrust to break up monopolies. It was the overreach of the government beyond those limits, via central banking and social democracy, that caused all the trouble. A democratic government needs to limit itself to rule of law and antitrust–and perhaps soup kitchens and shelters. And what if democracy turns out not to produce a government that limits itself to those activities? Then, Hayek says, so much the worse for democracy. A Pinochet is then called for to, in a Lykourgan moment, minimalize the state.

The human mind, Hayek says, is not just limited in its ability to synthesize a vast array of concrete facts, it is also limited in its ability to give a deductively sound ground to ethics. Here is where the tension develops, for he also wants to give a reasoned moral defense of the free market. He is an intellectual skeptic who wants to give political philosophy a secure intellectual foundation. It is thus not too surprising that what results is confused and contradictory.

Hayek gave the best exposition ever of the unpopular ideas of economic freedom that somehow triumph anyway, alleviating far more national and global poverty than more fashionable Scandinavia-envy and grandiose plans to "make poverty history."

Hayek did not talk about it at the time, but his warnings about the drift toward top-down planning were perhaps most relevant of all in the so-called Third World. It is the misfortune of the field called development economics that it was born at the moment of maximum doubt about individual liberty. As a result, economists conceived of development from the beginning—and to a frightening extent still do today—as a top-down process run by development experts operating on a blank slate.

William Easterly, "Hayek vs. The Development Experts" (23 October 2008)

Nor does [Ebenstein's] book offer any real historical setting for Hayek's career. Although often naive in his political judgments, Hayek was intensely concerned with public issues throughout his life. Yet we learn virtually nothing of the development of his views on the affairs of the day. What did he make, for example, of the Dollfuss dictatorship in Austria, where his teacher Ludwig von Mises served its clerical predecessor under Monsignor Seipel, and where Hayek himself planned to return in the 1930s? Mr Ebenstein never even mentions these conservative authoritarian regimes of the period. In later years, he records Hayek's efforts to secure South Tyrol for Austria once again; his organisation of the Mont Pelerin Society, an influential post-war group of free-market intellectuals; his recommendation that West Germany, France and Britain sue for entry as states into the United States; his reception in Verwoerd's South Africa and his admiration for General Pinochet's achievements in Chile; his wish that Iran be bombed in 1979 and Argentina in 1982. Homages from Barry Goldwater, Margaret Thatcher, Ronald Reagan and Yegor Gaidar roll past (the only discordant note comes from Ayn Rand, once Alan Greenspan's muse: “As an example of our most pernicious enemy, I would name Hayek. That one is real poison.”; or again: “The kind who do more good to the communist cause than ours”). Yet no coherent picture of Hayek's political commitments ever emerges, still less their relation to such important works as “The Constitution of Liberty” (1960).

The great theme of his remarkable explorations in intellectual history is the danger of all constructivism, the belief that we can deliberately design social arrangements which will be better than those we unwittingly hit upon. Paradoxically, however, the drive of Hayek's own work is itself characteristically that of a rationalist construction. Admiring David Hume and detesting Auguste Comte, his genius was to marry the sceptical insights of the one to more than a touch of the compulsive rigour of the other.

"The man who knew enough", The Economist (29 March 2001)

I must say that I have been deeply gratified by reading a book [Hayek's "The Sensory Order"] of which I had not been aware when I wrote my little essay on group selection theory … I was deeply impressed … I recommend this book to your attention [i.e. The American Academy of Arts and Sciences], as an exercise in profound thinking by a man who simply considers knowledge for its own sake. What impressed me most is his understanding that the key to the problem of perception is to comprehend the nature of classification. Taxonomists have struggled with this problem many times, but I think von Hayek considered this problem in a broader sense.

[Hayek] made a quite fruitful suggestion, made contemporaneously by the psychologist Donald Hebb, that whatever kind of encounter the sensory system has with the world, a corresponding event between a particular cell in the brain and some other cell carrying the information from the outside word must result in reinforcement of the connection between those cells. These day, this is known as a Hebbian synapse, but von Hayek quite independently came upon the idea. I think the essence of his analysis still remains with us.

[w:Donald O. Hebb] placed the Law of Effect at the synaptic level by proposing a correlation model of synaptic modification similar to that of Hayek (1952). This work was seminal in providing a basis for many subsequent theoretical studies.

The investigation of this problem — How is spontaneous order possible? — is sometimes referred to as the 'Hayek programme'.

Jon Elster, "The Cement of Society: A Study of Social Order", 1989, p. 250

I think that permanence and stability are the cardinal virtues of the legal rules that make private innovation and public progress possible. To my mind there is no doubt that a legal regime that embraced private property and freedom of contract is the only one that in practice can offer that permanence and stability … In reaching this conclusion, I have been heavily influenced by the work of Friedrich Hayek.

Though Hayek clearly allows for the possibility of a retreat from socialism, whether of the hot (command planning) or cold (welfare state) variety, and planning, Hayek’s critics, apparently taking Hayek at his word, use ‘inevitability’ to refer to the outcome (a totalitarian polity) that, according to Hayek, is supposedly generated by the cumulative logic inherent to interventionist policy and welfare state practices. Though taking care to note that a change in policy may occur, Hayek apparently considers the logic of intervention as primarily nudging policy in one direction, necessitating ever-further government intervention.

Hayek frequently argued that any failure to adequately mend our ways—abandon “our” supposed infatuation with “social justice” and other “high ideals”—would inexorably put us in the hands of the devil. Arguably, “we”—Obama and company clearly included—have yet to change our ways.

Hayek chided the critics of the Chilean junta for their supposed sin of apparent omission: their supposed proclivity to denounce Pinochet without simultaneously roundly condemning dictatorial regimes such as the USSR and North Korea. Again, however, this is not to deny that Hayek himself does appear to provide much support for Pinochet and his economic policies: indeed, much the same charge that Hayek leveled against the international media in 1978 can be readily leveled at Hayek’s own lamentable failure to roundly condemn the legion human rights abuses of any and all dictatorial regimes.

Much as Hayek’s penchant for claiming that “bad” interventionist policy will ineluctably drive us along the road to serfdom—ultimately culminating in full-blown command planning and political tyranny— is clearly apparent in his 1940s writings, the very same sentiments pervade the third part of The Constitution of Liberty.

Discussion of Hayek’s defense of transitional dictatorship tends to focus, rather narrowly, on his attitude toward the Pinochet regime per se. We have shown that Hayek’s assessment of transitional dictatorial power long predates Pinochet’s military coup in Chile.

Andrew Farrant and Edward McPhail, "Can a Dictator Turn a Constitution into a Can-opener? F.A. Hayek and the Alchemy of Transitional Dictatorship in Chile", Review of Political Economy (2014)

What of Ronald Reagan and Margaret Thatcher and their battles against government control of the economy? Here Hayek surprises. He does not disapprove of Reagan and Thatcher, but he has no high opinion of modem politicians in general. He does, however, say that Reagan's and Thatcher's policies "are as reasonable as we can expect at this time. They are modest in their ambitions." Modesty. The capacity to understand that well-meaning politicians — and their advisers, the intellectuals — will only wreak mischief if they try to guide economic development: This antipolitical concept is at the heart of Hayek's theory of economic and social development.

Interview of F. A. Hayek, Forbes, May 15, 1989

There was someone who is clearly very important who also was not a member of the scientific commission, but whose career and trajectory was ultimately very important for the definition of contemporary neo-liberalism. This is the Austrian von Hayek. He came from Austria and from neo-liberalism; he emigrated at the time of, or just before, the Anschluss. He went to England and also to the United States. He was very clearly one of the inspirations of contemporary American liberalism, or of American anarcho-capitalism if you like, and he returned to Germany in 1962 where he was appointed professor at Freiburg, thus closing the circle.

Michel Foucault, The Birth of Biopolitics: Lectures at the College de France, 1978-1979, five (7 February 1979)

I’ve always thought, incidentally, that many of us should welcome the fact that...a particular policy idea we hold does have this adverse effect on the opinions of other people. I think this is a very good thing, because it means that those of us who hold our views have to be better to get recognized than people who hold the other views. And in the long run, what matters is the quality of people who propose the ideas and not their number and not their position. It is because it is the quality of these ideas that matters so much that Hayek’s ideas have been so wide-spread and have had such an influence, and that you are now seeing the rise in the scientific as well as in the other parts of the world of more people of this particular kind of persuasion....
. . . I am one of those who has learned a great deal from Hayek. I hope he is as effective as I think he will be in his teaching in Germany, but I also hope that we will see him back here very often indeed.

Friedrich Hayek's influence has been tremendous. His work is incorporated in the body of technical economic theory; has had a major influence on economic history, political philosophy and political science; has affected students of the law, of scientific methodology, and even of psychology.

Over the years, I have again and again asked fellow believers in a free society how they managed to escape the contagion of their collectivist intellectual environment. No name has been mentioned more often as the source of enlightenment and understanding than Friedrich Hayek's … I, like the others, owe him a great debt … his powerful mind … his lucid and always principled exposition have helped to broaden and deepen my understanding of the meaning and the requisites of a free society.

In terms of his personal characteristics Hayek was a very complicated personality. He was by no means a simple person. He was very outgoing in one sense but at the same time I would say very private. He did not like criticism, but he never showed that he didn’t like criticism. His attitude under criticism . . . was to say “Well, that’s a very interesting thing. At the moment I’m busy, but I’ll write to you about it more later.” And then he never would!
On the other hand, he wasn’t like von Mises. He wasn’t in tolerant at all. You cannot conceive of Hayek doing the kind of thing that Mises did when, for example, he wouldn’t talk to Machlup for three years because Machlup had come out for floating exchange rates at a Mont Pelerin meeting. Hayek did not do that. That was, I believe, because of the influence of the London School on him. He was very much tempered by the London School....

There is no figure who had more of an influence, no person had more of an influence on the intellectuals behind the Iron Curtain than Friedrich Hayek. His books were translated and published by the underground and black market editions, read widely, and undoubtedly influenced the climate of opinion that ultimately brought about the collapse of the Soviet Union.

The first proponent of cortical memory networks on a major scale was neither a neuroscientist nor a computer scientist but … a Viennes economist: Friedrich von Hayek (1899-1992). A man of exceptionally broad knowledge and profound insight into the operation of complex systems, Hayek applied such insight with remarkable success to economics (Nobel Prize, 1974), sociology, political science, jurisprudence, evolutionary theory, psychology, and brain science (Hayek, 1952)."

Joaquin Fuster, Memory in the Cerebral Cortex : An Empirical Approach to Neural Networks in the Human and Nonhuman Primate (1995), p. 87

The main reasons for dwelling … on Hayek's model is simply that it has certain properties, absent from most others, that conform exceptionally well to recent neurobiological evidence on memory and that make it particularly suited to the current discourse."

Joaquin Fuster, Memory in the Cerebral Cortex : An Empirical Approach to Neural Networks in the Human and Nonhuman Primate (1995), p. 89

It is truly amazing that, with much less neuroscientific knowledge available, Hayek's model comes closer, in some respects, to being neurophysiologically verifiable than those models developed 50 to 60 years after his."

Joaquin Fuster, Memory in the Cerebral Cortex : An Empirical Approach to Neural Networks in the Human and Nonhuman Primate (1995), p. 89

Friedrich Hayek … seems to have been the first to postulate what is the core of this paper, namely, the idea of memory and perception represented in widely distributed networks of interconnected cortical cells. Subsequently this idea has received theoretical support, however tangential, from the fields of cognitive psychology, connectionism and artificial intelligence. Empirically, it is well supported by the physiological study and neuroimaging of working memory.

The [seminar in economic theory conducted by Hayek at the L.S.E. in the 1930s] was attended, it came to seem, by all of the economists of my generation — Nicky [Kaldor], Thomas Balogh, L. K. Jah, Paul Rosenstein-Rodan, the list could be indefinitely extended. The urge to participate (and correct Hayek) was ruthlessly competitive.

John Kenneth Galbraith, in "Nicholas Kaldor Remembered", in "Nicholas Kaldor and Mainstream Economics: Confrontation or Convergence?"

Sixty-two years ago I spent a year in what is known at Harvard as the other Cambridge. It was then in the high pulse of the Keynesian Revolution. Economic discussion was constant, intense, but London also called; once a week I came up to seminars here at the London School of Economics. A major attraction was Friedrich von Hayek, the noted conservative, author of “A Road to Serfdom,” his widely read analysis of the disastrous but emerging welfare state. He, however, was only slightly heard. The two hours were given over, all but exclusively, to telling him he was wrong. I found myself in support of this correction; it was education by the rebuke of error. (I trust that will not be the tendency on this pleasant and, for me, nostalgic occasion.) Over the years I’ve often presented myself to ardent conservatives as a student of von Hayek; it has added in an agreeable way to their normal confusion.

John Kenneth Galbraith, “The Unfinished Business of the Century” (1999)

Friedrich A. von Hayek, one of the strongest, and at times one of the few, economic voices advocating the reduction of government's role in the economy, is finally finding himself in the position of a Cassandra who suddenly that discovers people are listening.

John M. Geddes, "New Vogue for Critic of Keynes." The New York Times (May 07, 1979)

I recall vividly Hayek (who was a great economist but a poor policy analyst) commenting on the Pinochet overthrow of democratic government in Chile (Pinochet brought a gang of Chicago economists into town to implement the principles of laissez-faire markets, torturing and murdering thousands who had different ideas) commenting that he would prefer a [laissez-faire style] liberal dictatorship to an illiberal democracy.

I think the world of both Keynes and Hayek, the former as a wise practitioner whose economic theory is completely ridiculous (it took Hicks, Samuelson, and other serious economists to "make sense" of Keynes' impenetrable prose---"make sense" not by clarification of Keynes' ideas, but rather by offering an alternative analytical framework in which underemployment equilibrium is possible), and the latter as brilliant intellectual who was almost destroyed (despite his Nobel prize) by his adherence to the bizarre and irrelevant doctrines of the Austrian school, whose economic theory was dogmatically dictated by its paranoid fear of state intervention.

Hayek's work composes a system of ideas, fully as ambitious as the systems of Mill and Marx, but far less vulnerable to criticism than theirs because it is grounded on a philosophically defensible view of the scope and limits of human reason.

No-one who knows Hayek's work can doubt that his attempt to restate liberal principles in a form appropriate to the circumstances and temper of the twentieth century has yielded a body of insights wholly comparable in profundity and power with those of his forebears in the classical liberal tradition.

At the time of his death, F. A. Hayek was unquestionably the world's preeminent spokesman for classical liberalism and its most important thinker.

Ronald Hamowy, "F. A. Hayek, on the Occasion of the Centenary of his Birth", in Cato Journal, Vol. 9, No. 2. (Fall 1999)

There were two explanations, and one is that in Hayek and Friedman you had an absolutely marvelous cast—two people, one very bouncy and saucy and cheeky and outspoken, vigorous. This is Friedman. He was always bouncing out with ideas; sometimes they were a bit farfetched. Then you had Hayek, this very correct and rather serious, portly, gracious, slow, rather ponderous-speaking, sometimes thinking what his next sentence is going to be. And they were men unruled by any ambition, not trying to create a party, to get elected, to win votes—any of that. It was an amazing success of upright men of integrity, intellectual brilliance, not flashy, but very impressive to watch them performing over a wide range of topics.

John Hicks, Money, Interest and Wages (1982), p. 28; on his "Equilibrium and the Cycle" (1933), an influential work on the topics of intertemporal equilibrium, monetary theory, and trade cycle phenomena.

Hayek was making us think of the productive process as a process in time, inputs coming before outputs.

The three quarters of century that followed Austria’s collapse in the 1930s can be seen as a duel between Keynes and Hayek. … For Hayek, in short, the lesson of Austria and indeed the disaster of interwar Europe at large boiled down to this: don’t intervene, and don’t plan. Planning hands the initiative to those who would, in the end, destroy society (and the economy) to the benefit of the state.

Tony Judt, in Tony Judt and Timothy Snyder, Thinking the twentieth century (2012), Ch. 1. The Name Remains: Jewish Questioner

If Hayek believes that the spending of newly-printed currency on employment and consumption will worsen our current terrible depression, then Hayek is a nut.

The book, as it stands, seems to me to be one of the most frightful muddles I have ever read, with scarcely a sound proposition in it beginning with page 45, and yet it remains a book of some interest, which is likely to leave its mark on the mind of the reader. It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam.

John Maynard Keynes, Collected Works, vol. XII on Hayek's Prices and Production (1931); Hayek provided historical background up to page 45, after that came his theoretical model.

I am in full agreement, also, with Dr. Hayek's rebuttal of John Stuart Mill's well-known dictum that "there cannot, in short, be intrinsically a more insignificant thing, in the economy of society, than money," which he expresses admirably in the following passage from his last lecture: "it means also that the task of monetary theory is a much wider one than is commonly assumed; that its task is nothing less than to cover a second time the whole field which is treated by pure theory under the assumption of barter, and to investigate what changes in the conclusions of pure theory are made necessary by the introduction of indirect exchange. The first step towards a solution of this problem is to release monetary theory from the bonds which a too narrow conception of its task has created."

I was 25 years old and pursuing my doctorate in economics when I was allowed to spend six months of post-graduate studies in Naples, Italy. I read the Western economic textbooks and also the more general work of people like Hayek. By the time I returned to Czechoslovakia, I had an understanding of the principles of the market. In 1968, I was glad at the political liberalism of the Dubcek Prague Spring, but was very critical of the Third Way they pursued in economics.

What is becoming a scarce resource is any sense of the significance of this welter of information. We are losing the sense of what matters, of the habits of mind that can identify problems and learn from mistakes. Some of this can be traced to a loss of context; abstract ideas are not easily conveyed absent a recognisable embodiment, and the subtext, that which is not said, may be missing. Hayek’s quarrels with Aristotle are of the same character as his conversations with Sir Karl Popper and Milton Friedman: the welcome criticism of peers, those who can recognise the same premisses needed to define a given problem, however they may come to differ over their conclusions. Only now do we begin to realise that something valuable may have been driven from the world when the continuity and tradition of Western civilisation was shattered in the same blows that destroyed unwanted empires. Now in Eastern Europe there is nostalgic talk of the good old days under the Hapsburg empire.
The evolution of knowledge is inseparable from the evolution of language, and something invaluable is lost when ‘sound bytes’ replace the human voice, heard in face-to-face discussion of mutual concerns. Inflection counts for much, and what is not said can only be recognised when allusion and irony are possible. So Vienna waltzes.

The most intelligent defender of capitalism today … who has as fine and as powerful a mind as is to be found anywhere.

Irving Kristol, in "When Virtue Loses All Her Loveliness" — Some Reflections on Capitalism and "The Free Society" in The Public Interest (1970), and Capitalism Today (1971)

As a result of the efforts of Hayek, Friedman, and the many others who share their general outlook, the idea of a centrally planned and centrally administered economy, so popular in the 1930s and early 1940s, has been discredited.

It is in good part because of Professor Hayek's work [on the topic of social engineering], and also because of his profound insights — most notably in "The Constitution of Liberty" — into the connection between a free market, the rule of law, and individual liberty, that you don't hear professors saying today, as they used so glibly to say, that 'we are all socialists now.

The central dilemma of Hayek's political philosophy is, given his view of the limited role reason can play in social life, how is it possible to mount a systematic defence of liberalism without falling victim to the very kinds of rationalism he criticises? This difficulty stays unresolved in Hayek’s political thought because it is informed by two incompatible assumptions about what reason can achieve.

Chandran Kukathas, Hayek and Modern Liberalism (1990)

In the 20th century, three world wars facilitated a Communist revolution, a Fascist backlash and the subsequent collapse of both. The weakness of bureaucratic information flows (relative to market-based competitors) undermined Communist economies – a point emphasized by Frederick Hayek, the co-leader (with Murray Rothbard) of the fourth generation Austrian School of Economics. Flows of information and disinformation played pivotal roles in the First, Second and Third (that is, Cold) World Wars.

Robert Leeson, Introduction in Hayek: A Collaborative Biography, Part III, Fraud, Fascism and Free Market Religion (2015), edited by Robert Leeson

Friedrich Hayek is the twentieth-century social theorist who, probably more than any other, found himself vindicated by events — if not wholly, then at least in his central contention. He is also the one who, more than any other, himself exercised a significant political influence.

Although he is very probably unaware of this book and of my work in general, I want to express a very belated thanks to Friedrich A. Hayek. His work had much more of an influence on me than I realized during the writing of the First Edition [of "The End of Liberalism"] I neither began nor ended as a Hayekist but instead found myself confirming, by process of elimination and discovery, many of his fears about the modern liberal state.

Theodore J. Lowi, 'Preface to the Second Edition', in The End of Liberalism (1979), 2nd Edition, p. xiv,

It is likely that many modern economists would have no difficulty accepting Hayek's statement of the problem (of macroeconomics) as roughly equivalent to their own. Whether or not this is so, I wish … to argue that it should be so, or that the most rapid progress toward a coherent and useful aggregate economic theory will result from the acceptance of the problem statement as advanced by [Hayek].

Robert Lucas, Jr., in "Understanding Business Cycles", in Studies in Business-Cycle Theory (1981), p. 216

One of the most original and most important ideas advanced by Hayek is the role of the "division of knowledge" in economic society … [But if] I had to single out the area in which Hayek's contributions were the most fundamental and pathbreaking, I would cast my vote for the theory of capital. As I said before, when I reviewed Hayek's book on The Pure Theory of Capital, it is "my sincere conviction that this work contains some of the most penetrating thoughts on the subject that have ever been published." If two achievements may be named, I would add Hayek's contributions to the the theory of economic planning. Most of what has been written on systems analysis, computerized data processing, simulation of market processes, and other techniques of decision-making without the aid of competitive markets, appears shallow and superficial in the light of Hayek's analysis of the 'division of knowledge', its dispersion among masses of people. Information in the minds of millions of people is not available to any central body or any group of decision-makers who have to determine prices, employment, production, and investment but do not have the signals provided by a competitive market mechanism. Most plans for economic reform in the socialist countries seem to be coming closer to the realization that increasing decentralization of decision-making is needed to solve the problems of rational economic planning.

Hayek’s view that liberty was only instrumentally valuable, and his resultant rejection of a rights-based approach, left him with no basis on which to demarcate the legitimate actions of the state.

John Meadowcroft and William Ruger, "Hayek, Friedman, and Buchanan: On Public Life, Chile, and the Relationship between Liberty and Democracy", Review of Political Economy (2014)

Q. [McCallum] … are there other economists who have had a really major influence on your thinking? A. [Melzer] Well I mentioned Hayek. There are two ways. One is because of my interest in political economy. The other way is that Hayek was a pioneer in the use of information in economics. One of the papers that Karl and I wrote together that I continue to like was a paper called "The Uses of Money". In that paper we tried to incorporate information and the cost of information to explain why people use money. One of Hayek's most basic ideas is that institutions are a way of reducing uncertainty. Man struggles to find institutional arrangements which on average make life a bit more predictable. Our "Uses of Money" is not so much about money as we conventionally think about it, it's about the idea of a medium of exchange, the function of an institution called the medium of exchange and how the medium of exchange as an institution resolves a part of peoples uncertainty about the future.

If the central contest of the twentieth century has pitted capitalism against socialism, then F. A. Hayek has been its central figure. He helped us to understand why capitalism won by a knockout. It was Hayek who elaborated the basic argument demonstrating that central planning was nothing else but an impoverishing fantasy.

Kenneth Minogue, "Giants Refreshed II: The Escape from Serfdom: Friedrich von Hayek and the Restoration of Liberty" in Times Literary Supplement (14 January 2000), p. 11

The dilemma of a socialized system is that the information flow overwhelms a centralized system if it is open to new ideas and data, that closing the system and forcing the plan to work forecloses alternatives and risks unhedged mistakes, and that decentralizing without real markets poses the problems discussed by Hayek. These information problems permeate virtually all economic processes.

Hayek stressed the danger of hubris, of thinking you know more than you do, of imposing your idea of the world on others, and the importance of letting those closest to a problem use their local, tacit knowledge to help resolve it. He should have done the same here: he should have let the Chileans determine the level of their government’s involvement in economic life, using their own democratic means, even if that meant going further along the road towards socialism than he would have preferred.

Guinevere Nell, "The Alchemy of the Can Opener: How an Austrian Economist Found Himself Supporting Dictatorial Imposition of a Liberal Order", Review of Political Economy (2014)

Friedrich A. von Hayek, winner of the Nobel Memorial Prize in Economic Science, says that on the whole he approves of the economic policy of the Reagan Administration.
Yet, when he discusses particulars, Professor von Hayek - a conservative who is best known as an unrelenting opponent of Socialism and lesser forms of economic interventionism -sounds less than approving. He applauds the determination in Washington and London to stop inflation but laments that both Governments seek gradual progress. "You have to do it rapidly and drastically," he says.

"Business People; A Nobel Winner Assesses Reagan", The New York Times (December 1, 1982)

Information costs are reduced by the existence of large numbers of buyers and sellers. Under these conditions, prices embody the same information that would require large search costs by individual buyers and sellers in the absence of an organized market. (footnote 4: The original contributions were those of Hayek (1937 and 1945)).

Regarding social order, Fukuyama writes, "The systematic study of how order, and thus social capital, can emerge in spontaneous and decentralized fashion is one of the most important intellectual developments of the late twentieth century." He correctly attributes the modern origins of this argument to F.A. Hayek, whose pioneering contributions to cognitive science, the study of cultural evolution, and the dynamics of social change put him in the forefront of the most creative scholars of the 20th century. But Hayek's views about the "spontaneity" of social order remain controversial. In their extreme form, they imply that all deliberate efforts to manipulate social order — social engineering — are doomed to failure because the complex nature of our cultural heritage makes a complete understanding of the human condition impossible.Hayek was certainly correct that we have, at best, a very imperfect understanding of the human landscape, but "spontaneous" it is not. What distinguishes human evolution from the Darwinian model is the intentionality of the players. The mechanism of variation in evolutionary theory (mutation) is not informed by beliefs about eventual consequences. In contrast, human evolution is guided by the perceptions of the players; their choices (decisions) are made in the light of the theories the actors have, which provide expectations about outcomes.

I was very flattered when I once got a note from Hayek saying that he would like to come and talk with me. He had read The Rise of the Western World, and he thought it was a very interesting book. He came to Seattle and spent two days with me. We had a good time and I really enjoyed him. But I wish I had known then what I have learned since, so that I could have appreciated his visit more appropriately. I had never read his stuff on cognitive science in those days. He still seems to me the greatest economist of the twentieth century, and by a long way. If you look for people who really want to try and understand the world, Hayek came closer to that ideal than anybody who has ever lived.

While in graduate school I encountered the writings of Friedrich Hayek and Ludwig von Mises, which shook me out of my then socialist beliefs. There was Hayek's book of essays, Individualism and Economic Order, and Mises's wide-ranging and unsettling Socialism, which showed me I had not thought through any details — economic, social or cultural — of how socialism would work. One of their arguments in particular, about the impossibility of rational economic calculation under socialism, dumbfounded me. Whether or not the argument was ultimately judged to be correct, it was amazing, something I never would have thought of in a million years.

Robert Nozick, as quoted in "Robert Nozick" in The Harvard Guide to Influential Books : 113 Distinguished Harvard Professors Discuss the Books That Have Helped to Shape Their Thinking (1986), p. 187

I can testify from personal experience to the immense stimulus and direction which Hayek's migration to this country [Great Britain] gave to economic research in the 1930s, not only in London and economics faculties throughout the United Kingdom, but also in the international world of scholarship.

Arnold Plant, in "A Tribute to Hayek — the Rational Persuader" in Economic Age (January-February 1970)

I think that I have learned more from you than from any other living thinker, except perhaps Alfred Tarski … but not even excepting Russell.

Our intellectual productivity is declining. Still, yours is admirable. You can still lecture (I cannot)....I know that you feel that you cannot do the work you used to do, and although you have told me and others about it, you kept it hidden from your observant friends—even though you complain to them of it, and draw their attention to it....
But apart from the field of intellectual production, you have done so much for others. There are many former students you have encouraged and helped on their way. And there are many who, like myself, have been helped by you in the most critical stages of their development.

I have created myself a kind of generational gulf between you and myself. Although you were only 3 years old when I was born, you became, as I now realize, a kind of father figure....[E]ven now, when I am 82, and we have been friends for so many years, you still are! And, strangely enough, you yourself...described your feelings towards me as those towards a young man who has made good.

I should like to mention that I did not know Hayek’s book (The Road to Serfdom) when I wrote mine; in fact, my book was finished about six months before his. All I knew was a little pamphlet “Freedom and the Economic System,” in which he advocates “Planning for Freedom.”...The acknowledgement in my book refers to his practical help rather than to his influence; but since I wrote my book, I have read Hayek’s book (and several excellent articles), and I can only say that I have learned a very great deal from it. A few leftists here in England are in the same position ....Hayek, who I had seen only four or five times before, has been really wonderful to me in his many repeated approaches to various publishers, and I understand from the people here in the School [the London School of Economics] that he is always so. His interest in my book was mainly due to the fact that he too is hoping for a common basis of discussion for socialists and liberals.

Well … I've always been a voracious reader — I have read the economic views of von Mises and Hayek, and … Bastiat … I know about Cobden and Bright in England — and the elimination of the corn laws and so forth, the great burst of economy or prosperity for England that followed.

Ronald Reagan, in response to the question "What philosophical thinkers or writers most influenced your conduct as a leader, as a person?" when interviewed by Rowland Evan, in The Reagan Revolution (1981) by Rowland Evans and Robert Novak, p. 229

I very well remember Hayek's visit to Cambridge on his way to the London School. He expounded his theory and covered a black-board with his triangles. The whole argument, as we could see later, consisted in confusing the current rate of investment with the total stock of capital goods, but we could not make it out at the time.

While often right and enormously influential, Hayek himself agreed that some of his predictions did not become true.

J. Barkley Rosser, "The Road to Serfdom and the world economy: 60 years later", European Journal of Political Economy Vol. 21 (2005)

Hayek and Nozick both think that talk of distributive justice is misleading, because it suggests the presence of a distributing person or mechanism; in a developed economy there is no such thing, and in a free society, the attempt to institute such a thing would destroy all freedom. Hayek, however, supports this view with an account of the computational impossibility of deciding what to produce and dis tribute in order to achieve justice, while Nozick is more concerned to emphasize that the state has no right to seize the resources of individuals in order to distribute them according to any principle whatever.

The Hayek I met on various occasions – at the LSE, at the University of Chicago, in Stockholm (1945), at Lake Constance-Lindau Nobel summer conferences – definitely bemoaned progressive income taxation, state-provided medical care and retirement pensions, fiat currencies remote from gold and subject to discretionary policy decisions by central bank and treasury agents.

Friedrich Hayek, who died on March 23, 1992 at age 92, was arguably the greatest social scientist of the twentieth century. By the time of his death, his fundamental way of thought had supplanted the system of John Maynard Keynes — his chief intellectual rival of the century — in the battle since the 1930s for the minds of economists and the policies of governments."

I first had to discover certain things for myself, and essentially it was the behavior I observed in human subjects in my laboratory study of markets that motivated me eventually to study Hayek seriously. Reading with the eyes of a new mind, I was able to appreciate an enormous depth of understanding in the work of Hayek that would have escaped me if I had not had this personal experience in the laboratory.

The source of confusion here is that there was a Good Hayek and a Bad Hayek. The Good Hayek was a serious scholar who was particularly interested in the role of knowledge in the economy (and in the rest of society). Since knowledge—about technological possibilities, about citizens’ preferences, about the interconnections of these, about still more—is inevitably and thoroughly decentralized, the centralization of decisions is bound to generate errors and then fail to correct them. The consequences for society can be calamitous, as the history of central planning confirms. That is where markets come in. All economists know that a system of competitive markets is a remarkably efficient way to aggregate all that knowledge while preserving decentralization.
But the Good Hayek also knew that unrestricted laissez-faire is unworkable. It has serious defects: successful actors reach for monopoly power, and some of them succeed in grasping it; better-informed actors can exploit the relatively ignorant, creating an inefficiency in the process; the resulting distribution of income may be grossly unequal and widely perceived as intolerably unfair; industrial market economies have been vulnerable to excessively long episodes of unemployment and underutilized capacity, not accidentally but intrinsically; environmental damage is encouraged as a way of reducing private costs—the list is long. Half of Angus Burgin’s book is about the Good Hayek’s attempts to formulate and to propagate a modified version of laissez-faire that would work better and meet his standards for a liberal society. (Hayek and his friends were never able to settle on a name for this kind of society: “liberal” in the European tradition was associated with bad old Manchester liberalism, and neither “neo-liberal” nor “libertarian” seemed to be satisfactory.)

Robert Solow, "Hayek, Friedman, and the Illusions of Conservative Economics", New Republic (6 December 2012)

The Bad Hayek emerged when he aimed to convert a wider public. Then, as often happens, he tended to overreach, and to suggest more than he had legitimately argued. The Road to Serfdom was a popular success but was not a good book. Leaving aside the irrelevant extremes, or even including them, it would be perverse to read the history, as of 1944 or as of now, as suggesting that the standard regulatory interventions in the economy have any inherent tendency to snowball into “serfdom.” The correlations often run the other way. Sixty-five years later, Hayek’s implicit prediction is a failure, rather like Marx’s forecast of the coming “immiserization of the working class.”

Robert Solow, "Hayek, Friedman, and the Illusions of Conservative Economics", New Republic (6 December 2012)

Mrs. Hayek, I want you each day in the future to address your husband and inquire what his progress has been in what I consider to be one of the most interesting and intriguing fields, the evolution of the work of scholars.

George Stigler, at a going-away party in Hayek’s honor at the University of Chicago in 1962, Hayek Archive 116.10., Hoover Institution, Stanford University

What's the single most important thing to learn from an economics course today? What I tried to leave my students with is the view that the invisible hand is more powerful than the [un]hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That's the consensus among economists. That's the Hayek legacy.

Lawrence Summers, as quoted in "The Commanding Heights : The Battle Between Government and the Marketplace that Is Remaking the Modern World" (1998) by Daniel Yergin and Joseph Stanislaw, p. 150

During the following decade [of the 1950's] modern economic history took a dramatic swing away from the liberal-left consensus established by the Hammonds, Tawney and the Webbs. The seminal text for this change of direction was the 1954 collection of essays compiled by F. A. Hayek, "Capitalism and the Historians".

Miles Taylor, "The Beginnings of Modern British Social History?" in History Workshop Journal, Vol. 43, (Spring 1997), p. 163

Our inspiration was less Rab Butler's Industrial Charter than books like Colm Brogan's anti-socialist satire, Our New Masters … and Hayek's powerful Road to Serfdom, dedicated to 'the socialists of all parties'. Such books not only provided crisp, clear analytical arguments against socialism, demonstrating how its economic theories were connected to the then depressing shortages of our daily lives; but by their wonderful mockery of socialist follies, they also gave us the feeling that the other side simply could not win in the end. That is a vital feeling in politics; it eradicates past defeats and builds future victories. It left a permanent mark on my own political character, making me a long-term optimist for free enterprise and liberty.

For Dicey, writing in 1885, and for me reading him some seventy years later, the rule of law still had a very English, or at least Anglo-Saxon, feel to it. It was later, through Hayek's masterpieces "The Constitution of Liberty" and "Law, Legislation and Liberty" that I really came to think this principle as having wider application.

Myrdal was certainly committed to democracy, even in developmental contexts, and firmly opposed to empires. Democratic or otherwise, he was highly pessimistic—in retrospect excessively so—about the prospects for international economic development. Hayek had no problem with “transitional” authoritarianism, as in Pinochet’s Chile, with which he was associated. Hayek, an Austrian aristocrat teaching in London, and Myrdal, a Social Democrat who attempted to rally his fellow Swedes against Hitler, were united and defined by their anti-Nazism.

The key importance of the amount of information available and the frequent lack of relevant information have been dealt with only in the last decades. L. von Mises and F. A. von Hayek can rightly be regarded as pioneers in this connection.

The most interesting among the courageous dissenters of the 1980s were the classical liberals, disciples of F. A. Hayek, from whom they had learned about the crucial importance of economic freedom and about the often-ignored conceptual difference between liberalism and democracy.

Nearly two decades ago, during dinner with the late Nobel laureate Friedrich Hayek, I asked him if he had the power to write one law that would get government out of our lives, what would that law be? Hayek replied he'd write a law that read: Whatever Congress does for one American it must do for all Americans. He elaborated: If Congress makes payments to one American for not raising pigs, every American not raising pigs should also receive payments. Obviously, were there to be such a law, there would be reduced capacity for privilege-granting by Congress and less influence-peddling.

The dramatic redefinition of state and marketplace over the last two decades demonstrates anew the truth of Keynes' axiom about the overwhelming power of ideas. For concepts and notions that were decidedly outside the mainstream have now moved, with some rapidity, to center stage and are reshaping economies in every corner of the world. Even Keynes himself has been done in by his own dictum. During the bombing of London in World War II, he arranged for a transplanted Austrian economist, Friedrich von Hayek, to be temporarily housed in a college at Cambridge University. It was a generous gesture; after all, Keynes was the leading economist of his time, and Hayek, his rather obscure critic. In the postwar years, Keynes' theories of government management of the economy appeared unassailable. But a half century later, it is Keynes who has been toppled and Hayek, the fierce advocate of free markets, who is preeminent.

Daniel Yergin and Joseph Stanislaw, "The Commanding Heights: The Battle Between Government and the Marketplace that Is Remaking the Modern World (1998) p. 14